Imagine if you had a great income and could amass savings easily, and let’s make believe you already did this for many years. This project is to show you how easy it would be to live off of your assets. Assets are made specifically to provide you with more cash flow, more assets on top of the initial investment or a better net worth amount. I wanted to propose a make believe scenario for all of us here reading this blog. Let’s say you have saved 500 thousand dollars after the many-many years and you invested it in dividend paying stocks and bonds. The break down will be listed below for you to get the full effect of the numbers. I am showing you 9 real dividend stocks and a bond example with an average return of 5%. I divided the total amount by 50,000 for each investment as to stay diversified. So what do the numbers show?
1. You will get about 8,000 per Quarter from these investments.
2. You will get about 33,000 every year as dividend and bond interest income. ( Minus any taxes of 15-25% )
3. The cheaper the price the more shares you own and the greater your income per stock will be.
4. The riskiest stocks usually have the highest dividends so be careful.
5. The more sectors you choose the better diversified you will be.
6. 500, 000 will net you about 25-28 thousand after taxes with a 6% shared dividend/bond rate. (Annually)
7. 500, 000 in two savings accounts earning 3% will net you 10-12 thousand after taxes. (safest option)
8. Dividend investing always beats parking your money in a regular savings account.
9. 500K is a huge amount but with consistent investing and compounding interest it can be done.
10. Coca Cola was removed because it was over the $50 dollar maximum limit.
Stocks | Ticker | Price | Dollar Amount | Shares | Dividends | Per Quarter | QDR Cash Flow | |
Bond is Semi Annual | ||||||||
Bond Example | $50,000.00 | 5% | $2,500.00 | $1,250.00 | ||||
Coca Cola | KO | 61 | 0 | 1.76 | 0.44 | $0.000 | ||
Ent Prop. | EPR | 35 | $50,000.00 | 1428.571429 | 2.6 | 0.65 | $928.571 | |
Winstream | WIN | 11.5 | $50,000.00 | 4347.826087 | 1 | 0.25 | $1,086.957 | |
Con Edison | ED | 50 | $50,000.00 | 1000 | 2.4 | 0.6 | $600.000 | |
PSEG | PEG | 28 | $50,000.00 | 1785.714286 | 1.37 | 0.3425 | $611.607 | |
General Elect | GE | 15.09 | $50,000.00 | 3313.452618 | 0.6 | 0.15 | $497.018 | |
Verizon | VZ | 35 | $50,000.00 | 1428.571429 | 1.9 | 0.475 | $678.571 | |
SDRL | SDRL | 31 | $50,000.00 | 1612.903226 | 3 | 0.75 | $1,209.677 | |
ATT | T | 25 | $50,000.00 | 2000 | 1.68 | 0.42 | $840.000 | |
Plum Creek Timber | PCL | 35.76 | $50,000.00 | 1398.210291 | 1.68 | 0.42 | $587.248 | |
Total | $327.35 | $450,000.00 | $18,315.25 | $7,039.650 | ||||
$500,000.00 | $8,289.650 |
Given that this is a playful example to show moneywatch101 readers how important it is to save early and often. (It may take you 20-30 years to save this) Also to show the difference between dividend investing and regular savings accounts. Now it’s your choice where you want to save your dollars but the proof really is in the numbers. If I amassed this amount I would place my money in stocks like the ones mentioned here, but I would diversify to other sectors like healthcare and consumer staples. For this example Con Edison, PSEG, Plum Creek, and General Electric are on the safer side, while the rest are on the riskier side of investments.
If you don’t believe me – see this article from Seeking Alpha, they are known to give expert advice on financial matters. Dividend Article
Comment back on how you perceived the numbers and if you were shocked at how easy it is to get a good income with dividends. (33K a year is pretty good income for doing nothing.)
Watch your money grow and get a good income in the process.
Thanks,
Good way to look at your money grow. Most people think if I invest I will loose all my money but they don't see the long term benefits.
@Igg-Yes if we could have invested earlier and ride out the waves we all would be in a better position. Money does not buy you happiness but it does allow you the freedom to do what you want when you need or want it. Great Comment!